Feds Give, Feds Take Away

This morning’s big headline in the Washington Post is the possibility that 50,000 defense jobs could leave NVA because of Homeland Security regulations and recommendations of the Base Realignment and Closing Commission. Congressman Jim Moran, D-Alexandria, said it could be an “economic bombshell.”

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  1. Ray Hyde Avatar
    Ray Hyde

    In terms of congestion, taking 50,000 jobs out of congested areas of Arlington is roughly equivalent to building four new lanes of interstate. Assuming the jobs are actually necessary and will be moved, not lost, this represents wealth redistribution, and not an economic bombshell.

    If it takes fifteen years to accomplish the move, then that will be roughly equal to the amount of time it would take to plan and construct the highway, and it is likely to cost as much.

    Those empty offices are unlikely to stay empty, although office rents may come down. New buildings will have to be constructed to meet the new requirements, because it is unlikely that the old infrastructure can be economically retrofitted. Construction of all those new facilities will create an economic boom all it’s own, so the net result will probably be more growth and more business, not less.

    In the end, you will probably have to build that four lane road anyway, and probably several of them to accomodate increased inter-office traffic and the addition new businesses that move in to take advantage of low office rents near the seat of government.

    Loudoun County, watch out, because the Dulles area just became prime real estate. If the government is smart, they will use more and smaller structures which would be less inviting to attack, stringing them together with secure communications. It is a recipe for achieving the kind of technology based transportation improvements that Jim Bacon and others promote.

    And just as with residential development, the security setbacks and other requirements will eat up land space and increase construction costs.

    Fauquier County has been struggling to redevelop the former Vint Hill Farms site, which still had substantial communications services in place. Locating government jobs there would take a lot of commuters off of Route 66, temporarily. But since growth in Fauquier is limited to 1%, the end result would likely be more homes in places like Front Royal, and commuting would shift from the eastern end of 66 to the western end.

    Front Royal has substantial government property available at the old Remount Station, and the area has been depressed since the Avtex plant closed, and there is space at Mount Weather.

    My brother porposely chose to live near a Metro station and works only a couple of stops away. Like everyone else, his home values have soared. But now, after fifteen years he learns his company is relocating to Silver Spring. It is unlikely that he will be able to afford a similar home there, despite his own assessment increases.

    Now take his situation and multiply it by 50,000, and you begin to see why it is futile to think that land use planning can control growth or traffic demand. Even if such a massive change as now seems apparent does not occur, the cumulative effect of many smaller decisions such as those affecting my brother amount to the same thing.

    Government can no more afford the increased costs associated with highly developed areas than private business or individuals can. The market ascribes higher costs to those areas, but it also sets the value of the combined cost of lower cost areas plus the travel to them. The growth in outer areas suggests that people value that combination more than they value the convenience and vitality of more urban lifestyles.

    Since travel to those areas also costs less than travel in congested locations, the result is what you see happening now.

    Similar arguments can be made for offices as far west as Hagerstown, which will increase the need for the proposed techway.

    If this move results in more jobs near where people actually prefer to live, then it may be the best (economic, not environmental) thing to ever happen to the area. If you don’t believe it, just look at the success of Tractor Supply Co. as it moved to supply the needs of the New Ruralism.

    Of course, if government decides to move farther, like moving Justice to Texas, those that have said they would like to see the area look as it did 25 or 50 years ago may get their wish.

  2. Fredrik Nyman Avatar
    Fredrik Nyman

    Maybe we should move all these folks to one of the military bases that’s set to close in the coming round of base closings?

  3. If this is really occurring over “5-15 years” then that sounds like a trickle to me. There’s plenty of demand for good office space in Arlington. Other companies will jump in and take over these buildings. No reason to panic. This COULD slow down growth to a reasonable pace. But a recession? That’s negative growth…

  4. E M Risse Avatar
    E M Risse

    Paul has a point about the phasing but it is still a big bite.

    50,000 jobs translates to 12.5 million sq ft of office space +/-. According to yesterdays The Washington Post that is almost exactly (12, 372,260 sq ft) the amount of new office construction in Virginia within 20 miles of Memorial bridge that have been delivered since January 2002 or is now under construction.

    The Post suggests the Pentagon only leases 8 Million sq ft so there it something missing. Perhaps some of the government owned buildings do not meet the standards? Some workers are in small cubicles? Average lease size of 57,000 sq ft seems small too. There is a lot more to know about this case.

    One thing is clear: The far greater impact would be if those new criteria become part of commercial lenders criteria, defense vendor contract requirements or municipal land use/building code requirements.

    That would have the sort of disaggregation impact that automobile parking requirements and roadway geometry standards have had on settlement patterns.

    We will explore the ramifications in a future column.

  5. But if any region can handle it, NOVA can.

  6. The real question is this: what happens to all of that tax revenue that NOVA has counted on from the Federal government?

    You know – the revenue that caused the budget surplus that Mark Warner supposedly “lied” about.

  7. Ray Hyde Avatar
    Ray Hyde

    Ed makes a good point about these standards becoming lender criteria. That would mean evey building around here would more or less have to be built to those standards on the off-chance that government, THE major customer, might want your building some day. The costs would affect us all.

    One problem with standards is that frequently they become the basis for, or for the protection of, someone’s business, thereby restricting trade, raising barriers to entry, etc. Soon they become sacred cows and we can’t get rid of them.

    Take automobile parking standards. I know a fellow that has a business maintaining parking lots, sweeping, plowing, sealing, repainting. Parking standards are agood thing for him and his 200 employees. What happens if we set a standard that vehicles be 30% smaller in size?

    Parking standards originally came into place so that landlords couldn’t squeeze in more renters and foist the parking off on others as an externality. In their day they were a precursor to the idea that new construction should supply it’s own infrastructure. Over the years, those rules caused changes in how our living spaces look, and the standards are now viewed as a problem by some, even though they still meet their original intended purpose.

    Highway geometry standards are based on safety and mobilty considerations that still hold, not land use issues. Land use is an externality to the highway/road designer. Both of these standards affect land use, but that doesn’t necessarily mean they are bad.

    So, what’s the plan now? What makes us think we know any more today about how to plan than we did then?

    Much of Ed’s argument on land use starts with the premise that jobs are downtown and will stay there, therefore we should design our city around that idea. Then some terrorists change our ideas about the benefits of agglomeration. Maybe this is an opportunity to re-think what makes sense in today’s world from scratch.

    Why would we attempt to either co-locate or transport 3.5 million people if it’s not required? I happen to believe my home office is more comfortable, quieter, and causes far less impact than my city office: all it lacks is sufficient data security and connectivity.

    A lot of federal office space is pretty low quality. There is space in my building I’d be ashamed to assign someone to work in. The sick building problems at EPA were legendary for years. So, as far as quality of life is concerned, this may be a good thing.

    But Paul raises a good point. If this causes dislocations that causse property values to fall, can I get a refund for all those years I overpayed on the basis of value that since evaporated? Or will I have to pay still higher tax to support programs that were started during boom years and now can’t be killed? That’s one reason property tax makes no sense.

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